Thrive or dive in ‘25?
Brokerage house CBRE released its 3Q2024 Net-Lease Investment Volume report and the data shows continued mixed messages for the transaction market. Quarterly investment volume increased year-over-year by 7% following eight quarters of declines while trailing twelve-month volumes still fall below the prior comparable period by 18%.
Net lease transactions, as a percentage of total commercial real estate activity, has remained a stable at ~11% since 2021 - the industry is keeping pace with other asset classes.
Although it’s understandable industrial continues to lead the way (up 26% from prior year quarter), the retail property sales volume decline of 12% shows a continued bid-ask spread on bread-and-butter single tenant deals and cumulative headwinds from retail store closures, bankruptcies, etc. Office volumes continue to lag.
Perhaps the most interesting take-away shows cap rates back to 2014-2018 levels (depending on property type) and spreads inching upward (although still historically low). The 10-year US Treasury is up 40bps from quarter-end creating more questions than answers as we push toward 2025.
Will investors tighten expected returns and meet sellers - or will owners start capitulating as debt matures and leases slowly approach expiration?
Check out the full report at:
Net-Lease Investment Volume Increases | CBRE
-Sean Hostert